DISEQUILIBRIUM: The UPA has failed to project success
The immediate past RBI Governor D Subbarao made a telling point once.
He said that, "Twenty years ago when I had a thick mop of hair, I used to pay Rs 25 for a haircut.
Ten years ago, after my hair started thinning, I was paying Rs 50 for a haircut.
"And now, when I have virtually no hair left, I am paying Rs 150 for a haircut. I struggle to determine how much of that is inflation and how much is the premium I pay the barber for the privilege of cutting the governor's non-existent hair."
The short point is that inflation has debilitated the body of work that the UPA has put together over the last decade.
On Friday, finance minister P Chidambaram gave a wide variety of economic parameters which drove home the overarching point about inclusive economic development.
But all to no avail, for the unrelenting price spike continuously put the man on the street under unnecessary hardship and duress.
Numbers
Sadly, the UPA and its spin doctors have never been able to communicate effectively.
The absence of a communicable communication strategy has adversely impacted the UPA.
Even the years of burgeoning growth are dissipating due to the prices not easing.
In reality though, the growth imperatives since 2004 have been staggering, but for the price genie which could not be bottled.
While a lot of metrics for growth are incremental and organic, some of the numbers are truly mind boggling.
Unfortunately for the UPA and its PR managers, they could never ever spin the right kind of story around them.
If there was a big failure for the UPA, in a long laundry list of gargantuan- sized mishaps, then it was on the communication front. A dead loss is how I would describe it.
Failure after failure not just to cauterize wounds and gashes which are self-inflicted is part of the story.
The other more serious faux pas were primarily emanating from the arrogance of being in the saddle. An apathy and disregard for the common people.
Espousing their cause, but in reality distancing themselves from the hoi polloi.
Finance minister P Chidambaram gave a wide variety of economic parameters which drove home the overarching point about inclusive economic development. But all to no avail, for the unrelenting price spike continuously put the man on the street under unnecessary hardship and duress
A strangely detached style of leadership, holding the ragged populace pretty much in contempt.
A populace which has been subjugated, buried under a mountain of corruption and inflation.
A rising tide, it is said, lifts the boats, but the tide sadly never rose for UPA.
Except in 2009 when the farm loan waiver, MNREGA and other social security measures brought them back to power in a resounding fashion.
Growth
Let us look at some of the growth metrics.
For starters, let us take a gander at GDP. Nominal GDP is calculated at current prices and inflation is not included in this.
Against this, real GDP is adjusted for prices.
At Rs 55.03 lakh crore, India's real GDP is estimated to grow 5 per cent in 2012- 13, while nominal GDP is estimated to grow 13.3 per cent to cross Rs 94.6 lakh crore or nearly $ 2 trillion from approximately $700 billion in 2004-05.
What this has done is to widen the chasm of social inequalities and inequities - in 2011, India's richest 100 had a combined net worth of $241 billion or Rs 12,06375 crore, representing 16 per cent of the India's GDP.
Those at the bottom of the pyramid have been languishing as always untouched by the so called economic miracle leading to socio-economic disparities, disorders, complexities and complications.
Now, let us assess the average income of every Indian or per capita income.
Between 2004 and 2013, India's per capita income has grown nearly three times from Rs 24,143 to more than Rs 68,000 now.
Slam dunk.
A well-known barometer to track the economic health and vitality of India's corporate powerhouses is the BSE Sensex.
Stock exchanges and the companies listed on them provide a fair idea of how the economic juggernaut is functioning.
Here the figures are startling to say the least. Indian equities have grown manifold.
By providing as much as 300 per cent returns from 4,961 to more than 21,000 now.
Insulated from the global meltdown, courtesy a series of stimulus measures, India shrugged off the global credit contagion faster than others.
The bad news came more recently when the rupee fell off the cliff, going for repeated bungee jumps.
That by itself wreaked havoc across the economic fabric with the government and Mint Street refusing to intervene for most part.
Catalyst
The rise in minimum support prices for wheat and rice can be partly held up as the reason for the rise in inflation.
Take wheat for instance, in 2004 MSP for wheat was Rs 610 and this over the years has doubled to Rs 1,350.
Equally, this has acted as a catalyst for higher prices in the market as well as the MSP has to be factored into the selling and purchase price.
Food prices have gone up across the board, I am grouching against better prices for farmers, but this has led to a rise in the cost of living.
A fundamental principle that operates here is Ernst Engel's Law.
Engel's law is an observation in economics which states that as income rises, the proportion of income spent on food falls, even if actual expenditure on food rises.
Let me explain that.
One of the functions of a growing economy is that as people migrate to a better standard of living, eating habit evolves and protein consumption increases.
Carbohydrate-rich diets lead to protein-enriched eating.
Structural deficiencies have marred not just the economy, but UPA rule also, for they have never been able to come to terms with how to project their own successes.
No country for communication strategists, eh?
So, don't blame the over-zealousness of the CAG, CVC, CBI and the Supreme Court.
